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Compute the price of the bonds as of their issue date

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Question: Metro Company issues bonds with a par value of $75,000 on their stated issue date. The bonds mature in five years and pay 10% annual interest in semiannual payments. On the issue date, the annual market rate for the bonds is 8%.

1. What is the amount of each semiannual interest payment for these bonds?

2. How many semiannual interest payments will be made on these bonds over their life?

3. Use the interest rates given to determine whether the bonds are issued at par, at a discount, or at a premium.

4. Compute the price of the bonds as of their issue date.

5. Prepare the journal entry to record the bonds' issuance.

Reference no: EM131534745

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